FRB_20180719_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements Associated with CFPB’s Regulation B
(FR B; OMB No. 7100-0201)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, the Recordkeeping and Disclosure Requirements Associated with CFPB’s
Regulation B (FR B; OMB No. 7100-0201). Since 2011, the Consumer Financial Protection
Bureau (CFPB) has been responsible for issuing Equal Credit Opportunity Act (ECOA)
regulations that apply to institutions the Board supervises.1 However, the Board continues to be
responsible under the Paperwork Reduction Act (PRA) for renewing every three years the
information collections mandated by the regulation for institutions supervised by the Board.2
The Board accounts for the paperwork burden associated with Regulation B only for institutions
for which the Board has enforcement authority under ECOA.3 For these institutions, the total
current annual burden of the FR B is estimated to be 146,974 hours.
Background and Justification
ECOA was enacted in 1974 and is implemented by the CFPB’s Regulation B for
institutions the Board supervises.4 The ECOA prohibits discrimination in any aspect of a credit
transaction because of race, color, religion, national origin, sex, marital status, age (provided the
applicant has the capacity to contract), or other specified bases (receipt of public assistance, or
the fact that the applicant has in good faith exercised any right under the Consumer Credit
Protection Act (15 U.S.C. 1600 et seq.)). To aid in implementation of this prohibition, the statute
and regulation subject creditors to various mandatory disclosure requirements, notification
provisions informing applicants of action taken on the credit application, provision of appraisal
reports in connection with mortgages, credit history reporting, monitoring rules, and
recordkeeping requirements. These requirements are triggered by specific events and disclosures
1

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) transferred
rulemaking authority for ECOA to the CFPB, except for certain motor vehicle dealers that are excluded from the
CFPB’s rulemaking authority, which remain subject to the Board’s Regulation B located at 12 CFR Part 202. See
section 1029(a) of the Dodd-Frank Act. The Federal Trade Commission (FTC) has authority to enforce ECOA for
these motor vehicle dealers, although such enforcement authority is shared with the CFPB with respect to dealers
engaged in certain practices.
2
The Board accounts for the paperwork burden imposed under ECOA, as implemented by the CFPB’s
Regulation B, for the following institutions (except those entities supervised by the CFPB): state member banks;
subsidiaries of state member banks; subsidiaries of bank holding companies; U.S. branches and agencies of foreign
banks (other than federal branches, federal agencies, and insured state branches of foreign banks); commercial
lending companies owned or controlled by foreign banks; and organizations operating under section 25 or 25A of
the Federal Reserve Act (12 U.S.C. 601-604a; 611-631). The CFPB supervises, among other institutions, insured
depository institutions with over $10 billion in assets and their affiliates (including affiliates that are themselves
depository institutions regardless of asset size and subsidiaries of such affiliates).
3
Other federal agencies account for the paperwork burden imposed under ECOA on the institutions for which they
have administrative enforcement authority. Other federal agencies with administrative enforcement authority
include the CFPB, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National
Credit Union Administration, and FTC.
4
See 15 U.S.C. 1691. The CFPB’s Regulation B is located at 12 CFR Part 1002.

must be provided within the time periods established by the statute and regulation. There are no
required reporting forms associated with the CFPB’s Regulation B. To ease the burden and cost
of compliance (particularly for small entities), Appendix B to Regulation B provides model
disclosure forms.
Description of Information Collection
The paperwork requirements of Regulation B are described below.
Recordkeeping Requirements
Section 1002.12 - Record Retention
A creditor must retain for 25 months any written or recorded material related to a
consumer credit application, as well as copies of any notification of action taken and statement of
specific reasons for adverse action (or any written notation or memo of an oral notification and
statement), and any written statement submitted by the applicant alleging a violation of ECOA or
Regulation B. Comparable records of business credit applications must be retained for
12 months. The record retention requirements also extend to information used in prescreened
credit solicitations.
If the creditor conducts a self-test (as defined under section 1002.15), the creditor
ordinarily must retain all written or recorded information about a self-test for 25 months. If a
creditor has actual notice that it is under investigation or is subject to an enforcement proceeding
for an alleged violation, or if it has been served with notice of a civil action, the creditor must
retain the information until final disposition of the matter, unless an earlier time is allowed by the
appropriate agency or court order.
Disclosure Requirements
Section 1002.9 - Notifications
No other federal law mandates the following disclosures, although the Fair Credit
Reporting Act (FCRA) requires related, but different, disclosures in some of the same
circumstances. Moreover, some states may have similar requirements.
Consumer credit. Under ECOA and Regulation B, an applicant is entitled to notice of the
action taken on a credit application and, if the creditor’s decision results in the denial or
termination of credit, a written statement of the specific reasons for the adverse action (or
disclosure of the right to request the reasons). When adverse action is taken against a consumer
based on information from a consumer reporting agency, the FCRA requires additional
disclosures, which may be provided on the same document. The adverse action notice must
generally be in writing, except that creditors that did not receive more than 150 applications
during the preceding year may provide notices of adverse action orally.

2

Business credit. Generally, a business applicant’s asset size determines a creditor’s
precise obligations. When a creditor takes adverse action on an application from a business with
$1 million or less in annual revenues, the creditor may notify the business applicant orally or in
writing. The creditor must also provide the applicant with reasons for an adverse action or a
notice telling the applicant of its right to request the reasons within the same time periods that
apply in the case of consumer applicants. A business with more than $1 million in annual
revenues is entitled to oral or written notice of adverse action within a reasonable time of the
action taken and, if timely requested, a written statement of reasons for an adverse action.
Section 1002.10 - Furnishing of Credit Information
Creditors that report credit history must report histories of accounts that spouses are
permitted to use or on which they are contractually liable in a fashion that reflects both spouses’
participation. This requirement applies to any creditor that reports credit history to credit
reporting agencies or to other creditors.
Section 1002.13 - Information for Monitoring Purposes
A creditor is required to request that an applicant indicate his or her race, ethnicity, sex,
age, and marital status in connection with applications for credit primarily for purchasing or
refinancing a dwelling to be occupied by the applicant as a principal residence and secured by a
lien on the dwelling. Creditors are otherwise prohibited from collecting such applicant data with
some exceptions. The applicant must be informed that the information is being requested by the
federal government for the purpose of monitoring the creditor’s compliance with federal law and
if the applicant declines to provide the information, the bank will note the applicant’s ethnicity,
race, and sex based on visual observation or surname.
Section 1002.14 - Rules on Providing Appraisal Reports
A creditor is required to provide to an applicant, as a matter of course, a copy of all
appraisals and other written valuations developed in connection with an application for credit
that is to be secured by a first lien on a dwelling within specified time periods. Applicants are
permitted to waive the timing requirements for receipt of the appraisals and other written
valuations, but in such cases the creditor must generally provide the copies to the applicant prior
to consummation (if closed-end credit) or account opening (if open-end credit). Creditors must
also notify applicants in writing within three business days of receiving an application that a
copy of all appraisals and other written valuations developed in connection with applications for
covered mortgage credit transactions will be provided to the applicant promptly. The notice of
an applicant’s right to receive a copy of appraisals is not required to be in any particular format,
but the regulation contains model language to ease compliance.

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Self-Testing
Recordkeeping Requirements
Sections 1002.12 and 1002.15 – Incentives for self-testing and self-correction
Disclosure Requirements
Section 1002.5 – Rules Concerning Requests for Information
When a creditor inquires about, and notes, personal characteristics such as race or national
origin for the purpose of conducting a self-test under section 1002.15, the creditor must disclose
orally or in writing to the consumer at the time of the information request that providing the
information is optional, that the information request is to monitor compliance with ECOA, that
federal law prohibits discrimination on the basis of this information or on the basis of an
applicant’s decision not to furnish this information, and that, if applicable, certain information
may be noted by visual observation or surname.
Time Schedule for Information Collection
The recordkeeping and disclosure requirements associated with Regulation B are
triggered by certain events, and disclosures must be provided to applicants within prescribed
times (as discussed above), and records must be retained for specified periods (as discussed
above).
Legal Status
The CFPB is authorized to issue its Regulation B pursuant to its authority to prescribe
regulations to carry out the purposes of ECOA (15 U.S.C. 1691b). The obligation to comply
with the recordkeeping and disclosure requirements of CFPB’s Regulation B is mandatory.
Because the recordkeeping and disclosure requirements of the CFPB’s Regulation B require
creditors to retain their own records and to make certain disclosures to customers, the Freedom
of Information Act (FOIA) would only be implicated if the Board’s examiners retained a copy of
this information as part of an examination a bank. Records obtained as a part of an examination
or supervision of a bank are exempt from disclosure under FOIA exemption (b)(8), for
examination material (5 U.S.C. 552(b)(8)). In addition, the records may also be exempt under
(b)(4) or (b)(6). Records would be exempt under (b)(4) if the records contained “trade secrets
and commercial or financial information obtained from a person and privileged or confidential”
and the disclosure of the information would cause substantial harm to the competitive position of
the respondents (5 U.S.C. 552(b)(4)). Records would be exempt under (b)(6) if the records
contained personal information, the disclosure of which would “constitute a clearly unwarranted
invasion of personal privacy” (5 U.S.C. 552(b)(6)).

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Consultation Outside the Agency
On April 13, 2018, the Board published an initial notice in the Federal Register
(83 FR 16098) requesting public comment for 60 days on the extension, without revision, of the
FR B. The comment period for this notice expired on June 12, 2018. The Board received one
comment letter that addressed matter outside the scope of this proposal. On July 3, 2018, the
Board published a final notice in the Federal Register (83 FR 31149).
Estimates of Respondent Burden
The current annual burden for the recordkeeping and disclosure requirements associated
with this information collection is estimated to be 146,974 hours. These recordkeeping and
disclosure requirements represent approximately 1.4 percent of the total Federal Reserve System
annual paperwork burden.

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Number of
respondents5

FR B
Recordkeeping
Section 1002.12
Record retention for applications,
actions, and prescreened
solicitations
Disclosure
Section 1002.9
Notifications
Section 1002.10
Furnishing of credit information
Section 1002.13
Information for monitoring
purposes
Section 1002.14
Rules on providing appraisal
reports
Self-testing
Recordkeeping
Section 1002.12
Incentives
Section 1002.15
Self-correction
Disclosure
Section 1002.5
Rules concerning requests for
information, disclosure for
optional self-test

Estimated
Estimated
Annual
average hours annual burden
frequency
per response
hours

958

1

8

7,664

958

12

6

68,976

958

12

2.5

28,740

958

12

0.25

2,874

958

12

3

34,488

92

1

2

184

23

1

8

184

92

12

Total

3.5

3,864
146,974

The total current cost to the public is estimated to be $8,237,893.6

5

Of these respondents, 649 are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/document/support--table-size-standards.
6
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$69, 15% Lawyers at $68, and 10% Chief Executives at $94). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2017, published March 30, 2018, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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Sensitive Questions
Sensitive questions are not contained in any report or survey sponsored by the Board in
connection with Regulation B. However, applicants for mortgage loans are asked to voluntarily
provide information on ethnicity, sex, age, and marital status so that regulators may monitor for
compliance with the law. If they do not provide the information, certain information may be
noted by visual observation or surname. For all non-mortgage credit, a creditor may not ask or
note applicants’ sex, race, color, religion, or national origin. There is an exception permitting
collection of this information for purposes of conducting a self-test that meets the requirements
of section 1002.15. It is at the option of the applicant to provide this information.
Estimate of Cost to the Federal Reserve System
Since the Board does not collect any information in connection with Regulation B, the
related cost to the Federal Reserve System is negligible.

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